Crossing Our Desk:

-As U.S. and European Union banking regulators seek greater control over bitcoin, they might want to watch what’s happening in Switzerland.

The neutral European nation is becoming a “mecca” for financial cryptography, says Chris Odom, the Chief Technology Officer at Monetas and the founder of the decentralized Open Transactions platform for encrypted financial tools. (Cryptography is the computer science upon which bitcoin and other cryptocurrencies are founded.) And partly that’s because they’re finding a more welcoming environment legally.

In his latest video update on Monetas’ expansion, Mr. Odom announced that he had finally moved his family from Austin, Texas, to Zug, Switzerland to be with the rest of the company’s team and help build the German-speaking region’s “Crypto Valley”

Who are his new neighbors? Well, “right up the road,” is Ethereum, which like Monetas is developing a decentralized platform for financial, economic and social services, in its case one that outside developers can use to create new software applications that bypass middlemen such as banks and lawyers. Ethereum is currently in the second week of a six-week “pre-sale” of ether, the digital currency-like financial tokens needed to run its network, and has so far attracted more than $7 million worth of bitcoin-denominated commitments through that offering.

Also near Monetas is Bitcoin Suisse, a bitcoin ATM provider. And among various non-financial cryptography projects, Odom cites ProtonMail, which provides decentralized, securely encrypted email, Threema, a secure version of What’sApp, and Silent Circle, whose BlackPhone project aims to provide secure, encrypted mobile telephony. All are effectively working to protect people’s privacy by blocking third parties such as telephone carriers and Internet Service Providers from snooping on communications.

Why the growth in Switzerland? Odom attributes it to the country’s “legendary neutrality,” as well as its respect for privacy and security — two big buzzwords for cryptographers — and the fact that it is already a tech hub for established names such as International Business Machines Corp. and eBay Inc . He points out that outside of its Mountain View, Calif., headquarters, Google Inc.’s biggest engineering office is in Zurich.

It also likely helps that Swiss regulators have so far taken a relatively accommodative, hands-off approach toward bitcoin and cryptocurrencies.

In a recent report, the Swiss Financial Market Supervisory Authority, known as FINMA, the same regulatory body that has been imposing stringent new capital rules on big banks such as UBS and Credit Suisse, said it didn’t intend to draft special rules for bitcoin because the digital currency’s presence was currently “insignificant.” FINMA said existing rules on money laundering and illegal behavior would suffice.

While they might wince at being seen as “insignificant,” this minimalist stance is music to bitcoin startups’ ears — especially in comparison to what some new, smaller startups regard as the onerous new compliance requirements that the New York Department of Financial Services has proposed with its new “Bit License” initiative. (Whereas larger, well-funded bitcoin businesses such as the investment fund created by Cameron and Tyler Winklevoss have more or less welcomed New York Superintendent of Financial Services Benjamin Lawsky’s initiative as a legitimizing development, smaller players say it creates an innovation-stifling barrier for new entrants. There’s also concern that the NYDFS has granted just 45 days for respondents to submit comments.)

The Swiss stance is also much friendlier than that adopted among the banking regulators of Switzerland’s EU neighbors. The new European Banking Authority issued an opinion in early June recommending that banks under its purview stay away from bitcoin businesses until new regulations are drawn up.

While regulators in New York and Brussels are devising new ways to rein in the bitcoiners, their industry is doing what it always said it would do and moving to jurisdictions with a lighter touch. Right now this game of “regulatory arbitrage” is playing out in Switzerland’s favor. (Michael Casey)

In The News:

–An executive from giant credit card company Visa Inc. has made some comments to the Australian Financial Review that open the door just a crack to the prospect of having it work with bitcoin.

Whereas Visa’s leadership has in past tended to downplay bitcoin’s relevance, Sam Shrauger, senior vice president of digital solutions, said its network could in the future process payments in “virtual currencies to the extent that that makes sense.” In those comments, which were picked up by Coindesk, Shrauger was quick to add that Visa is “not thinking about [incorporating bitcoin] today.”